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The Palaeocene/Eocene thermal maximum represents a period of rapid, extreme global warming 55 million years ago, superimposed on an already warm world. This warming is associated with a severe shoaling of the ocean calcite compensation depth and a >2.5 per mil negative carbon isotope excursion in marine and soil carbonates. Together these observations indicate a massive release of 13C-depleted carbon and greenhouse-gas-induced warming. Recently, sediments were recovered from the central Arctic Ocean, providing the first opportunity to evaluate the environmental response at the North Pole at this time. Here we present stable hydrogen and carbon isotope measurements of terrestrial-plant- and aquatic-derived n-alkanes that record changes in hydrology, including surface water salinity and precipitation, and the global carbon cycle. Hydrogen isotope records are interpreted as documenting decreased rainout during moisture transport from lower latitudes and increased moisture delivery to the Arctic at the onset of the Palaeocene/Eocene thermal maximum, consistent with predictions of poleward storm track migrations during global warming. The terrestrial-plant carbon isotope excursion (about -4.5 to -6 per mil) is substantially larger than those of marine carbonates. Previously, this offset was explained by the physiological response of plants to increases in surface humidity. But this mechanism is not an effective explanation in this wet Arctic setting, leading us to hypothesize that the true magnitude of the excursion--and associated carbon input--was greater than originally surmised. Greater carbon release and strong hydrological cycle feedbacks may help explain the maintenance of this unprecedented warmth.